Following Terra’s collapse, increased risk perception could make AVAX outperform SOL.
Most important points:
Avalanche is a blockchain platform that can process 4500 transactions per second. While it has a fast-growing ecosystem of Dapps, AVAX’s price has been impacted by the correction in the broader crypto market.
Solana is one of the most scalable platform blockchains on the market today. As adoption grows, SOL price has suffered from the correction in the broader market.
While both Avalanche and Solana will do well in the long run, AVAX could outperform SOL in the short to medium term. This has a lot to do with SOL’s frequent network outages in 2021 and the risk awareness that Terra’s collapse has caused investors.
The decentralized application space is in a growth trajectory and the demand for launch pads is increasing. Avalanche is one of those who have shown rapid growth in a very short time. Though only three years old, Avalanche now has one of the largest and fastest growing Dapps ecosystems in crypto. This is due to the strong core statistics. They include low costs and high throughput – up to 4500 transactions per second. Despite the rapidly growing Dapps ecosystem, the price of Avalanche has taken a nosedive in 2022. This has a lot to do with the bearish nature of the broader cryptocurrency market.
Like Avalanche, Solana is a launch platform for Dapps and has seen a significant level of adoption over the past 2 years. This is due to the scalability and super low costs. Solana can process up to 50,000 transactions per second and costs go as low as $0.001 per transaction. In 2022, there was an increase in investments in the Solana NFT ecosystem that ran into the hundreds of millions of dollars.
Which is a better buy?
Due to the fast-growing nature of their ecosystems, both Avalanche and Solana have a high potential for growth in the future. With their prices at record lows since their last record highs, once the broader market returns, there’s a good chance that these two could perform well. However, it is more likely that Avalanche will outperform Solana in the next bull run.
This has a lot to do with the history of the two networks. Avalanche has been consistently stable since launch. On the other hand, Solana has faced several network outages in the recent past that have put its reputation on the line. After the recent collapse of Terra, there is a good chance that many investors will be much more aware of the risks associated with the cryptocurrencies they invest in. This could penalize SOL versus AVAX in the short to medium term.
While both AVAX and SOL are good long-term investments, the medium-term opportunities are favorable for AVAX. The collapse of Terra LUNA has made investors aware of the risks of cryptocurrency and SOL has more perceived risks than AVAX.